Cloud is a word for a number of services.
All have one in common: Not bound to a physical server.
What a normal server is doing most of the time is: Nothing. Waiting
With virtual machines the resources can be used more efficient. Better usage of memory and CPU power.
Different services, even different operating systems can run side by side on a single server.
- You need less physical servers : less investment needed
- Services easy can be moved between servers : increased availability
- New servers easy added to the cloud : increased flexibility